Can't get paypal to work?  This may help.

Well, 24 hours after my 32 GB ipod touch purchase, I am not an apple fan. I had a very typical experience, I have windows 7 32bit on a Dell XPS laptop M1530, I downloaded a fresh version of iTunes (9.2.1.5), I upgraded the ipod to newest version (iOS4). Why did I spend so much time getting this stuff to work? I did get it to work, but support was useless and blamed microsoft (in fact I didn't do all the steps correctly).
Anyway a few things I figured out. Before you begin, you need a valid paypal account. You also need internet explorer. This doesn't work on Chrome for whatever reason. You can go to start menu -> Default programs to change web requests to open up IE instead of chrome (then just change it back when you are done with paypal activation).
Also, you need to have activated the computer for use with itunes. Why that's not done when you install is a mystery. From the menu bar at the very top of itunes, go to the store menu, and select 'activate my computer'. Note, you can only have 5 active computers, but you can deactivate all of them. The only way to deactivate individual computers is to have them connected to the network and with itunes, and just go store -> deactivate computer. If the computer is not activated the process will also fail when paypal redirects back to the itunes app.
Next, create/update your itunes account. When you get to the payment options, you select paypal. That launches a web browser. Again, chrome didn't work for me. You go through the paypal logins. When you are done you should get two warning messages, one to display only secure or all content (hit 'no'). The other warning mentions that you are launching an app from a web browser. Click allow (or yes or whatever).
The process should bring you back to itunes purchase setup. Scroll down to the bottom, hit 'done'. To verify, I log out and log back in again, and look up your account info. It should have paypal. Note, once you get this set up, you don't really have to screw with it again I think.
The other tidbit I have is that once you download the apps (click the price tag on the app) you need to sync your ipod. If you click on your ipod on the left menu, then click on apps, select all and click apply on bottom right of screen. That should work.

Also, you need to have activated the computer for use with itunes. Why that's not done when you install is a mystery.
Because you don't need an iTunes account tio use or install iTunes.
You cannot authorize the computer until you have an account because that's what you are authorizing.
Note, you can only have 5 active computers, but you can deactivate all of them.
You can have 5 computers authorized at any one time. You can only select Deauthorize all when you do hae 5 authorized and you can only do it one time per year.
Next, create/update your itunes account.
Again you cannot "activate" (which is authorize) unless you have an iTunes account. So you cannot authorize iTunes and then create an iTunes account.

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